Lehman Bankruptcy Judge Rejects Barclays' Motion to Dismiss Suit

New York Bankruptcy Court Judge James Peck rejected Barclays' bid to dismiss a suit related to its purchase of Lehman Brothers' North American brokerage business, according to published reports.

Barclays received a $5 billion discount when it acquired the bankrupt bank's brokerage operations in September 2008, Lehman Brothers attorney and Jones Day partner Robert Gaffey said in news reports. The Lehman estate is looking to recover -- through a lawsuit -- money it feels its owed.

Barclays bought Lehman's North American operations for $1.8 billion days after its Sept 15 bankruptcy filing.

Gaffey did not immediately return calls seeking comment.

Barclays said in a statement that there was not a basis for the motion filed by Lehman's creditors: "More than a year after the terms were agreed upon and contrary to well-established federal law, the creditors seek to change the terms of the sale."

Barclays also said in its statement that renegotiating the transaction "would undermine the ability of the federal government and private parties in the future to sell distressed bank assets in order to protect as much as possible depositors, shareholders, creditors, and the government."

A Barclays spokesman declined to comment further.

Barclays is said to have received the $5 billion discount because "Lehman traders had instructions from Barclays to reduce the values to liquidation value," Gaffey said in published remarks.

Lehman filed for bankruptcy in September 2008 in New York's southern district bankruptcy court under case No. 08-13555.